Vietnam Labor Federation proposes minimum wage growth at 8%

The Hanoitimes - A proposal to increase the regional minimum wage by 8% in Vietnam for next year is facing objection as it will burden more enterprises.

The Vietnam General Confederation of Labor (VGCL), which represents employees across the country, has proposed an increase of 8% in the regional minimum salary for 2019, local media reported.

The proposal was made at the national wage council on July 9 which normally gathers yearly to discuss the regional minimum wage changes to be applied for the coming year. The new wage would benefit about ten million people who are working with labor contracts in non-state enterprises.

At the meeting. Photo: Mai Đan

However, the Vietnam Chamber of Commerce and Industry (VCCI), which represents businesses, was against the increase, asking for the wage to remain unchanged in 2019.

According to VCCI Vice Chairman Hoang Quang Phong, most domestic and foreign employers told the chamber that next year is not the right time to adjust the minimum wage as they want to increase their financial capacity or spend funds on training and improving employees’ skills to better meet job requirements and increase productivity.

“The minimum wage should be increased then, in the further future,” Phong said.

Meanwhile, VGCL Vice President Mai Duc Chinh said the 8% increase proposed by his agency is suitable as Vietnam’s gross domestic product (GDP) in the first half of this year grew more than 7 percent over the same period last year.

“The economic growth is notable and laborers deserve benefiting from the economic development,” he said.

He also said that government already decided the seven-percent increase for employees working in state organizations and enterprises this month, despite its tightened budget.

A recent survey by the VGCL showed that the monthly minimum wage could cover about 92 percent of minimum living conditions for employees while Vietnam targeted that by 2020, the minimum wage could ensure their minimum living conditions.

The 2018 regional minimum wage is 6.5% higher than that of 2017, equal to an increase of VND180,000-230,000 (US$8-10) a month.

Speaking at the meeting, Deputy Minister of Labor, Invalid and Social Affairs cum Chairman of the council Doan Mau Diep said that according to Resolution 27-NQ/TW on salary reform that the Communist Party of Vietnam Central Committee issued in May 2018, the state would gradually not intervene in the wage policy of enterprises but promote negotiations between employers and employees.

He said that from now until 2020, regional minimum wage must be adjusted to ensure minimum living conditions for employees, especially those who are paid the least.

“When negotiating minimum wage changes, factors such as GDP, labor productivity, salary on labor market and employers’ budget must be taken into account,” he said.

Commenting on the regional minimum salary increase in 2018, Diep said it would be lower than that of 2017. However, for the two parties to negotiate and find a common voice, it is necessary to conduct two or three sessions. It is expected that the second meeting will take place in two weeks.